tigretigre.com

Someone asked me to elaborate a bit on what would motivate participants in my SOA social-network aggregation scheme. So here's my take on it at this stage of the game.

The answer for the general case (i.e. not specifically taking social networks as the target of aggregation) is in some ways easier. It seems like there have to be applications for this idea which have sufficient value to end-users that they would put up enough money to make it a sustainable system. The question is whether or not social networking is one of those applications.

It's obvious that social-networking as we currently know it is not going to support this without some changes. There are no shortage of free social networks, supported largely by ads. But they often end up either competing with or partnering with Google to tap this particular revenue stream. Some networks such as LinkedIn are free to some degree, but also have premium subscriptions and other fee-based services. And with users pressuring networks into opening up their platforms to sharing, and portal-style aggregators popping up all over, the networks don't have the captive audience for their ads that they might like.

(Side note: Dave McClure suggests a few business models the social networks have yet to try.)

So it seems to me that the networks themselves would be open to my idea as a way of recapturing revenue from the eyes that got away. And there are plenty of people who would be willing to put work into one or more of the intervening layers, if only for their own amusement. The real question is whether there is enough value to end users to make it worth forking over some hard earned cash.

The answer is completely unknown. The volume is there to make a lot of money on even very low margins. But how low is too low? What will the market sustain? The rampant popularity of text messaging despite its inane pricing structure completely unhinged from actual operating costs demonstrates that consumers can be quite willing to shell out for a convenient, and cool, mode of communication.

What I think it will ultimately take to succeed in this application:

1. A significant value add - Is convenience of gathering and distributing social network content enough? Or are there other things that could be accomplished in a system like this that are not likely to work in an ad-supported framework?
2. Micro- or even nano-payments - From my own experience, and those of my legion of Facecrack-addicted friends, the volume of interactions in a single day would require per-transaction prices well below the penny mark to be of any use. Critics of micropayments argue that the "mental cost" of evaluating such low-value transactions makes using them impractical. I would answer in a couple of ways:
   1. The aggregate cost of all these transactions will be something worth the mental cost evaluating, and automated tools can help in the process of comparison shopping and overall cost monitoring.
   2. Two words - text messaging. If people can spend 20 cents a message without any shopping whatsoever, they will, under the right circumstances, pay less for more.

So given all of that, there is still no definitive answer as to whether it will all work out in the end. I am pursuing this project despite the lack of a compelling business case for the following reasons:

1. I want the end product for my own personal use.
2. I want to practice my craft based on ideas of my own for a change rather than just to serve my employer's goals. I think I've done some damn good work in service to my employers, but I'm in the mood to strike out in my own direction a little more.
3. I'm a big fan of "pay-as-you-go" service as I think it encourages more rational behavior both on the consumer side and the provider side. Ad-supported services hide costs from consumers and add to a general sense of entitlement. One-price-fits-all products make inefficient use of the supply-demand curve, so pricing can be majorly hit-or-miss. With "pay-as-you-go", especially in a truly competitive marketplace, consumers are constantly educated about their costs and providers can (and must) adjust prices in response to a much more measurable demand. So whether or not I know it can succeed, I'd like to model it a bit to see if enough information can be gathered to test my hypotheses.